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What Paying Customers Reveal About Advertising Potential

Our collective online experience is funded by advertising. If it were not for its gigantic advertising network, Google would be able to operate. If it were not for the affiliate links, banner ads and sponsored content on many of your favorite websites and blogs, the content you enjoy reading would have never been written or created.

But as much as people might complain about advertising, as much as people may continue to use ad blockers to circumvent much of it, how many people are actually willing to open their wallets in order to avoid all this advertising? How much does it really hurt or irritate people to have to look at ads?

The Pain of Paying

It might surprise you to learn that very few people would be willing to spend any money at all in order to avoid all advertising whatsoever across the entirety of their online experience. This comes from the context of using a smartphone, but one survey revealed that only about 30% of people are willing to spend as little as a dollar a year to bypass all advertising.

As you can imagine, a properly monetized website or app should be able to generate more than $3 for every 10 regular users over the course of an entire year. Even if this minority were willing to pay, you’d still make more money through advertising instead.

Big Bucks from a Small Group

Where a further curiosity arises is the fact that about 4.5% of those surveyed said they would be willing to pay a dollar a day to block all ads in all apps. If we take this at face value, it would mean that this very small cohort would effectively be contributing 80% of the total revenue. It’s the Pareto principle all over again.

When thinking about how you can make the most money from your blog, website, app, online service or any other means of making money online, what this all means is that you shouldn’t worry too much about what the average user thinks or is doing. You shouldn’t worry too much about appealing to the masses. What you should worry about is getting the attention (and money) from that top demographic.

This observation or trend becomes even more apparent when you look at the “freemium” model of many mobile apps and games. Through microtransactions of varying value, some 60% of the total revenue generated by mobile games using this model comes from just 0.23% of all players. Yes, that’s one-quarter of one percent. That’s one player out of every 400 bringing in more than half of the total revenue.

Finding just one more player like that is theoretically more valuable than getting another 799 other players. The challenge, of course, is figuring out how you can get that one more extra valuable player. That’s the million dollar question.

Focusing on the Right Numbers

In the context of blogging, this relates back to a lesson that John has put forth on several occasions. Yes, it is certainly wonderful when you can increase your traffic numbers. It sure feels great when you have more people reading your blog and that can help with publicity. But the fact of the matter is that if you want to make more money, it’s far easier to increase your eCPM (how much you earn per thousand visitors/users/pageviews) than it is to increase your raw traffic.

Going from earning $5 with 1000 readers to earning $10 with 1000 readers is remarkably easier than figuring out how to get 2000 readers instead. Most of the money will come from a smaller subset, so focus on what they want and how you can deliver it to them.

And yes, you can still make money if your readers start using ad blockers on you too.

The Original Dot Com Mogul

John Chow, a damn fine person, friend of the community, Ultimate Fighting Championship contestant, member of the Save the Whales Foundation, the man who controls the black market on baby seal pelts and member of the probably yo’ daddy foundation...